Booms, busts keep investors on their toes
AS the South China Morning Post celebrates its 90th birthday, there is an eerily familiar feel about the coverage of the stock market.
As investors, dealers and the public reeled in amazement at the speed at which share prices soared and index barriers were shattered last month, reports of earlier booms show that the events of October 1993 are nothing new - it is just that the numbers are bigger.
The stock market as front page news is, however, a fairly recent addition to the Post's coverage. Before World War II, readers were content with a small list of major price changes, a one-paragraph market report and slightly longer lists of prices in London and New York.
Even in the mid-1950s, when the cult of the equity was being born, shipping items were more relevant than stock market intelligence.
But as the market grew and, with it, the interest of the individual investors, the Post began to widen its coverage of stock prices and company news.
In February, 1969, Business News became a separate pull-out, although of only four pages, and it was revamped as the Business Post in June, 1986.
In the Business News supplement of October 31, 1968, the financial correspondent reported that it had been a record-breaking week for shares, with trade moving both ways in hectic deals.
At the beginning of that week, the Post reported that trading had totalled a record $19 million in one day. On Monday, October 18 this year, the stock market recorded turnover of $11 billion.
It was real seat-of-the-pants journalism then, because there was no official measurement of overall price movements: it was not until a year later that the Post reported that Hong Kong was getting a stock market gauge, to be called the Hang Seng Index, which would cover 33 stocks.
Another year later, a Post headline read ''Astronomical buying spree on stock market'', the report stating that trade of $41.66 million had been recorded.
In 1972, the now almost traditional post mid-Autumn festival boom was under way again. ''Market goes berserk,'' said the Post, which reported that businessmen were warning about speculation getting out of hand as the Hang Seng soared more than 100 points in a day.
They were right. Three days after that story, the headline was ''Share values skid'', as the index slumped 86 points to 672.2.
The casino-like atmosphere was disturbing more than only businessmen, and the government announced in January, 1973, that it was drafting a bill to regulate the securities market. It finally emerged at the end of the year - for enactment as the Securities Ordinance and Protection of Investors Ordinance the following February.
It was too late, however, for many players in the market because, following a switch-back year, the worldwide market crash that followed the 1973 six-day Yom Kippur War shook the territory.
''Hong Kong suffers biggest dip in world stock markets,'' reported financial editor Malcolm Surry on December 12. The value of shares had crashed 25 per cent in less than two months, wiping $1.2 billion off the value of the market.
It did not end there. Surry reported less than a week later that millions more had been wiped out as the Hang Seng Index dropped 27 points to 423.
This was not to be the darkest hour because, despite the mayhem in world markets that December, the markets continued to function. Until their unification into the Stock Exchange of Hong Kong in 1986, there had been four markets in the territory.
One market or four, it was all the same as October 19, 1987, or Black Monday, hit the world's equities. While every other major market in the world gritted its teeth and held firm against the storm of selling, the Hong Kong stock exchange outraged and scandalised much of the investing community by announcing it was shutting its doors for an unprecedented four days.
''Hong Kong's credibility as an international financial centre was severely dented yesterday with its decision to close the stock market for four days,'' thundered Howard Winn on the front page of the newspaper.
It was, said another front page report, ''unthinkable''. ''An immature decision,'' a senior lecturer at the Hong Kong University told the Post. Richard Witts, then managing director of Schroder Securities and who had been secretary of the stock exchange through the booms and busts of the 1970s and 1980s, told our reporter he had never considered such a step.
Support for the action came from John Mackenzie, chairman of the Hong Kong Association of Banks, who was quoted as saying the suspension was a decisive and courageous decision.
It was also futile. The market was front page news again on October 27, with reports that when trading re-started after the four-day break and the weekend, the crash had only been postponed. The Hang Seng Index plunged 1,120 points to 2,242.
A rescue bid proved useless. A group of tycoons and Chinese businessmen led by the Hong Kong and Shanghai Bank, including Li Ka-shing, poured millions into the market, but they could not plug the black hole.
The Hong Kong market was never to be the same again. Stock exchange chairman Ronald Li was eventually disgraced, and the authorities decided it was time to really tackle the problems of the gambling den that the exchange had become.
The man chosen to do this was Ian Hay Davison, who had earned his spurs as chief executive of the Lloyd's of London insurance market.
''Sheriff Davison riding in,'' Business Post reported on November 12, 1987. When Mr Davison produced his 443-page report on June 7, 1988, it was a ''damning indictment of the territory's stock exchange, futures market and regulatory bodies'', commented business editor Stephen Leather.
The next big blow to Hong Kong share prices did not come from its international weaknesses, but from the tragedy of Tiananmen Square.
On June 5, 1989, the day after the shootings, the Hang Seng Index plunged 22 per cent as frightened investors rushed to dump shares, and the Business Post reported that the Hong Kong Bank was, as in 1987, leading a price-support action to restore some sanity.
It was a short-lived slump. As confidence returned, the Hang Seng began to climb again. Senior Chinese leader Deng Xiaoping's famous visit to Shenzhen in January last year cemented the view that whatever happened in politics, the economics of the mainlandwere bullish for local share prices.
The rest of the world got the message early last month, when US analyst Barton Biggs reported on the opportunities, sparking a flood of international buying for Hong Kong stocks, which sent the Hang Seng Index surging 1,480 points, or close to 20 per cent in two weeks.
''HK leads explosion as index bursts 9,000,'' proclaimed the Post.
The question now is where the Hang Seng will be on the newspaper's 100th birthday.